GC Update — ArtDEX Case Study
Let’s explore different ways to drop NFTs on ArtDEX!
Hello Geniuses! This is the first development update since ArtDEX, our new NFT exchange, launched on Tezos mainnet.
If you don’t know about ArtDEX, we invite you to view the docs to see what it’s all about!
We’ve enjoyed a smooth and successful mainnet launch, and we’ve already hit the milestone of 10k XTZ volume! Community response to ArtDEX has been wonderful, and we’re committed to supporting ArtDEX as our main initiative for the next few months.
Still, we’re already back in the lab! GC has pushed multiple UI/UX updates since launch, adding new discovery features, shortcuts, and tools. If you haven’t seen ArtDEX in a while, we invite you to check out the updated UI on artdex.io!
ArtDEX Case Studies
What is a case study?
Our ArtDEX case study series will be a test of different launch patterns for new NFT collections on ArtDEX.
Here at GC, we understand that the ArtDEX rabbit-hole goes deep. We want to try out different ways to create & sell using ArtDEX, so that we can recommend the best patterns to creators.
With these drops, we will track our experience and do case study write-ups on the SalsaDAO Guidebook. We want to analyze the drops from different angles, so that creators will know which bonding curves and parameters to choose for their future ArtDEX-native drops.
If a case study goes well, we’ll look integrate the launch pattern into the upcoming ArtDEX Launchpad project. By standardizing and adding these tools directly to ArtDEX, it will be simple for creators to do the same type of NFT drop.
Let’s get into our planned case studies.
Shepardz: Testing Pure Price Discovery
This drop will be the simplest case study for launching on ArtDEX.
Salsa Shepardz will be a 1000-supply PFP collection, with random glasses, colors, & backgrounds. Shepardz are built with an early internal version of DynaMint, so they will have fully on-chain art & metadata.
⚠️ Shepardz will have SP!
How will we drop Shepardz?
Shepardz will be launched in one large ArtDEX pool on a linear bonding curve. This pool will initially be filled with just Shepardz; as users buy & sell NFTs against this pool, the price will increase or decrease until the market equilibrium is found.
Enabling price discovery is one of the most powerful features on ArtDEX, and we want to show that off with the Shepardz drop.
Why is this launch pattern important?
On normal listing/offer NFT marketplaces, creators usually have to arbitrarily pick a launch price and strategy. This is necessary because there is no solution for automated price discovery on classic marketplaces.
Without a bonding curve, creators may price their collections too low, leading to fewer profits from the sale overall. Creators may also price their items too high, leading to leftover supply and decreased number of holders after the sale.
Using a bonding curve on ArtDEX helps the market find the fair price for each NFT item and the overall sale.
MTTR Brews: Testing The Curve Swap
MTTR Brews extend the lore from last year’s MTTR Atoms drop.
This upcoming drop will be a smaller collection of 100–250 NFTs. Brews will have artwork that is dynamic, animated, & hosted fully on-chain. MTTR Brews will also have SP.
The twist to this collection: your MTTR Brew will be a radioactive mixture, which means that your Brew will “decay” over time, based on an exponential curve (like real-life nuclear decay).
As your MTTR Brew decays, a hidden color & glow will start showing up in the MTTR Brew art over time. This is similar to how Timekeepers change their art dynamically based on the current time.
How will we drop these?
MTTR Brews will be a test of an advanced launch pattern: the Curve Swap.
Curve Swap means that we will launch MTTR Brews in two ArtDEX pools, with supply split between the two pools. (We’ll skip over the importance of price discovery, as that’s been covered in the last section)
Let’s look into how the pools are set up.
The first goal is to increase the floor price quickly, using the lower priced Pool 1.
As users buy from this pool, the price will increase but there will be no liquidity to sell the NFT back to ArtDEX (yet). This one-way volume will lock in initial price increases after launch. This is by design!
1. As users buy from Pool 1, the price will increase.
2. Price in Pool 1 eventually passes the price in Pool 2.
3. Users will start buying from Pool 2 instead of Pool 1.
4. Price in pool 2 eventually passes the price in Pool 1.
5. Users will start buying from Pool 1 instead of Pool 2.
6. Repeat steps 2–5, until equilibrium is found.
We call this method a Curve Swap because users are automatically ushered from Pool 1 to Pool 2 and back to Pool 1, based on the current price of the NFT collection.
By simply controlling the initial price & delta, we can push users to buy from Pool 1 (one-way) at the start, then from Pool 2 (two-way) as NFTs are purchased.
Why is this pattern important?
Curve Swap is a pattern that allows a creator to set an implicit minimum price on their collection. If the price hits that minimum, then the primary purchasing pool will “swap” from the one-way pool to the bi-directional trading pool, as described above.
Users will only be able to sell their NFT back at Pool 2’s elevated price.
This is essentially a way to deny NFT flipping until a certain price threshold is hit. This launch pattern can be used to maximize profits from initial demand (via one-way curve with high delta), and then use the exponential curve to slow down price drops from sellers.
As buyers & sellers are ushered into using Pool 2, the user fee also kicks in for the creator. This means that you can make extra profits from heavy flipping/arbitrage of your new collections.
This may seem complex! That’s why we’re trying it first. We’ll document our experience using this Curve Swap launch pattern and post in the SalsaDAO Guidebook.
The Spice Mines: Testing LP Tokens + IFO
This drop will happen after we’ve run and reviewed the first two case studies, so it may be a while, but this one will be innovating.
Spice Mines will be a new mini-game on SalsaDAO, with Spice Mine Passes being the main NFT that starts it all.
⚠️ Spice Mine Pass NFTs will NOT have SP. ⚠️
Rather, they will be a give the holder the right to claim SP Gems once a week from the Spice Mines. This can be considered an SP subscription, and users will be able to buy & re-sell Spice Mine passes to transfer rights to the future SP.
How will we drop these?
First, a bit of background. On ArtDEX, all pools are personal. This means that we don’t automatically make LP tokens that represent your position, unlike SpicySwap’s shared liquidity pools.
With the Spice Mines drop, we’re planning on testing LP token integration for ArtDEX. This drop will use a special ArtDEX pool where users will be able to mint and redeem LP tokens, like a classic token DEX.
This use-case is great for creating incentives to reward NFT liquidity providers, similar to classic setups for LP token yield farming on token DEXs.
LP token integration is also useful for setting up an Initial NFT Offering on ArtDEX, which is the launch pattern we’ll be using for Spice Mine Passes.
What is an Initial NFT Offering?
Our design for Initial NFT Offerings (INOs) mimics the design for Initial Farm Offerings (IFOs). If you remember, GC has already used the IFO model as the launch pattern for Matter DeFi.
This pattern is a great choice when building community liquidity pools that are pre-filled upon launch. Let’s go over the expected INO process:
1. Creator chooses public supply of NFTs, for example 100.
2. Users contribute XTZ to an open (or permissioned) sale.
3. All of the XTZ & 100 NFTs are placed as liquidity into an ArtDEX pool.
4. LP Tokens are minted to users based on their % contribution to the sale.
At this point, an INO creator has different options for their LP tokens:
These LP Token handling styles would be controlled by a smart contract for maximum user trust & safety.
Why are INOs helpful?
IFOs & INOs help projects by taking care of price discovery beforehand, then launching with less volatility.
The price per item and amount of liquidity is discovered automatically during the initial public sale.
When the ArtDEX pool opens publicly, users without LP tokens will still be able to buy the new drop at the discovered price, and INO backers will be providing liquidity and earning user fees immediately!
This launch pattern is a great way to balance incentives on all sides of the market, and it creates a nice base layer to build a project from.
Excited yet? We are too!
Look forward to the Salsa Shepardz drop, where we test pure price discovery on ArtDEX, coming very soon to ArtDEX!
Looking to launch on ArtDEX? Reach out to us on Discord or Twitter! We’re developing a program to reward creators with $sDAO or SP for building volume on ArtDEX!
Follow us on Twitter for all the updates!